Mexico's Pemex offers to prepay chunk of $14.7 billion in bonds

Mexico's Undersecretary of Finance and Public Credit Gabriel Yorio speaks during an interview with Reuters in Mexico City, Mexico September 11, 2019. REUTERS/Edgard Garrido

MEXICO CITY (Reuters) - Mexico’s Pemex said on Thursday it had launched a tender offer to prepay around a third of $14.7 billion in bonds maturing between 2020-2023, in President Andres Manuel Lopez Obrador’s latest effort to shore up the state oil firm.

The offer says Pemex is looking to prepay up to $5 billion of those bonds, using a major capital injection announced by the Mexican government for this purpose on Wednesday.

The offer will expire next Wednesday.

Pemex also offered $7.5 billion worth of bonds with maturities of seven, 10 and 30 years, news service IFR reported. It cited a source close to the deal who said Pemex had received $37 billion worth of offers.

Lopez Obrador, a veteran leftist who took power in December, has vowed to revive Pemex, a company that became an icon of Mexican self-sufficiency after it was created with the expropriation of foreign oil interests in 1938.

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However, years of declining oil output, mismanagement and corruption have taken their toll on the firm, which is now the world’s most heavily indebted oil company, with $104 billion in financial debt.

The firm, formally known as Petroleos Mexicanos, is also fighting to avoid a second downgrade of its debt to junk status, after Fitch Ratings took that step in June.

To avert a further credit ratings downgrade, the Mexican government under Lopez Obrador has given Pemex tax breaks and cash support several times this year, and has budgeted for another $4.4 billion of similar support in 2020.